York Region to consider vacant homes tax to fight speculation

Globalnews.ca
May 29, 2023
Brock Weir

A potential Vacant Homes Tax in York Region, envisioned as a financial incentive to free up unoccupied homes bought by speculators, will be revisited in the fall after Regional Council considered staff recommendations to put the program on ice until 2024.

Regional Council, which met last Thursday, voted to consider the matter once again this autumn after financial staff at the Region earlier this month said recent examples in Toronto indicate the Region might not make as much money from the program as originally anticipated.

Another factor, they added, was uncertainty from the Provincial level of government.

“We have done so much work on this and advanced it so much,” said Newmarket Mayor John Taylor at a Committee of the Whole meeting, referring to the original recommendation to hold things for another year. “Are we genuinely concerned it could be net negative? That seems like an awful long way to go from the kinds of numbers we’re seeing in Vancouver or the KPMG study.”

Regional Treasurer Laura Mirabella said a “number of factors” figured into their recommendation to hold, including recommendations that may be due from a Provincial working group, but particularly the experience of the City of Toronto.

“They are first out of the gate in Ontario and they are just going through their implementation right now and we’re seeing it did not go as smoothly as their consultants -- and they are our consultants -- had suggested it might,” she said of Toronto’s experience. “Most recently, after this report was written with the intention of seeing how things turned out in Toronto, we now have some data to suggest that the estimate of vacant homes that came from consultants is either overly optimistic or there is going to be a higher rate of dispute.”

Implementing the Vacant Homes program could cost an estimated $4 million, she added, and if only a quarter of what was expected came in, it would be a “significant financial risk.”

Mayor Taylor suggested any shortfall could be offset by adjusting the tax rate, but the Treasurer said that “we don’t know at this point whether an increased rate would impact compliance with any future declarations.”

Overall, Mayor Taylor was supportive of the program, but an alternate view was offered by Markham Mayor Frank Scarpitti.

“I think it might be a tool 1/8to address the housing crisis 3/8 but a pretty insignificant tool, and one that ultimately doesn’t create that much housing for the demand that’s out there,” he said. “I think aside from Toronto and aside from the speculation tax in BC, I think there were also changes in the Federal budget that pertained to changing or reselling condo units. I think we should look into that as well because that will reduce any of the activity out there with some of the vacant units.

“Based on the advice we get, and I appreciate advice we pay for is advice we should take into consideration, there are respected economists who take the view that this is not an effective tool and a waste of time.”

At last week’s meeting, however, delegates outlined how, in their view, a tax such as this would make a difference, including Yvonne Kelly of the Affordable Housing Coalition.

“We are in the midst of a housing crisis that this body (Regional Council) declared, so why would the vacant housing tax (VHT) be deferred for another year?” she asked members. “With an average housing cost of $1 million, home ownership has become unattainable for many in York Region. As a result, the demand for rental housing has increased and it has not been matched by increasing supply. As a result, vacancy rates in York Region are among the lowest in Canada, rents are among the highest, and the majority of renters are being priced out. From 2008 to 2018, York Region subsidized housing waitlist grew by 176 per cent. Over 16,000 households are currently on that list?

“Passing a vacant homes tax can be one of the immediate solutions to this crisis. You know that all options need to be on the table and it will take several measures to address this. In the midst of a self-declared housing crisis, why would the VHT as a policy letter be deferred to another year? It can’t be because there isn’t public support because in September 2022, a public consultation by KPMG found that 71.5 per cent of York Region respondents supported a vacant housing tax. It can’t be because other municipalities have not already tried it because they have.

“It can’t be because the VHT won’t curb the speculative nature of housing that is keeping homes and units off the market and driving up prices because that is exactly what it is intended to do. It can’t be for a lack of understanding of what the tax could achieve, not just as a deterrent to speculation but also as an eventual revenue generating stream because this has been a hot topic in York Region for the last three years. It can’t be because we’re moving so quickly on other solutions that we’re on a fast-track to solving this problem because we’re not even close.”

The only “reasonable conclusion”, she said, was a lack of “political will.”

“The sooner we take action on it the more housing we can save and the fewer lives that will be completely disrupted or destroyed because of it,” Kelly concluded. “Even if it doesn’t necessarily yield high returns on investment, it will no doubt yield an investment in cost savings on the homelessness and community program side of the equation.”

Mayor Taylor’s motion for a report to come back “in the fall of 2023” was approved by Regional representatives.